Problem

MathGames produces two electronic, handheld educational games: Fun with Fractions and Coun...

MathGames produces two electronic, handheld educational games: Fun with Fractions and Count Calculus. Data on these products follow.

 

Fun with Fractions

Count Calculus

Production volume  

150,000 units

10,000 units

Components  

450,000 parts

100,000 parts

Direct labor hours  

15,000 DLH

2,000 DLH

Packaging materials

150,000 boxes

10,000 boxes

Shipping cartons  

100 units per carton

25 units per carton

Machine setups  

52 setups

52 setups

Machine hours  

5,000 MH

2,000 MH

Additional data from its two production departments follow.

Department                     Driver                         Cost

Assembly department

 

 

Component cost  

Parts

$495,000

Assembly labor  

Direct labor hours

244,800

Maintenance  

Machine hours

100,800

Wrapping department

 

 

Packaging materials  

Boxes

$460,800

Shipping  

Cartons

27,360

Machine setup  

Setups

187,200

Required

1. Using ABC, determine the cost of each product line.


2.  What is the cost per unit for Fun with Fractions? What is the cost per unit of Count Calculus?


3.  If Count Calculus sells for $59.95 per unit, how much profit does the company earn per unit of Count Calculus sold?


4. What is the minimum price that the company should set per unit of Fun with Fractions? Explain.

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Solutions For Problems in Chapter 17